Preliminery tax return 2009

Stoffa

Hi.

Can anyone help. This is a bit of an 11th hour query so hopefully someone can advise.

A brief summary of my problem.

In 2006 I moved into a new house and started renting my old house. I submitted info to revenue in 2007 declaring income and expenses for this year in 2007

For my 2007 return i employed a tax consultant who prepared and submitted my return in October 2008.

Having found several unbelievable mistakes by my tax consultant i relieved him of his services and decided to undertake my 2008 return myself.

i registered on ROS and filled in my form 11 for 2008 return. pretty simple i thought. however i then got to the sign and submit and i was prompted for my 2009 prelim tax amount.

having read around the web i now understand i may have to pay something for 2009 now. i was under the (incorrect) impression that i only had to file and pay my 2008 return in 2009, then pay my 2009 return in 2010 etc etc.

so i am confused as to what i need pay.

for my 2006 return i received a rebate

for my 2007 return i received a rebate.

for my 2008 return that i am just about to submit i have a liability of just over 2K.

i certainly do not want to have to pay interest charges or penalties so what must i pay now in prelim tax for 2009? i am an PAYE employee and the only reason i am filling in a form 11 is because i have the rental property. i am not sure how to calculate my 2009 prelim.

can anyone help me.

(apologies for the essay).

Stoffa.

maddogcollins

To answer your question :

"preliminary tax is the taxpayer's estimate of their income tax payable for the year ended (in this case) 31st December 2009. It must be paid and filed by 31st October 2009 unless using ROS when it is the 16th November 2009. To avoid interest the prelim amount paid is the lower of:

• 90% of the final tax liability for the current year (2008) or
• 100% of the final tax liability of the immediately previous year (2007), or,
• 105% of the year preceding the immediately previous year (2006).

In terms of your own case as you had a rebate situation in the previous years you would be best advised paying a minimum of 90% of your 2k liability.

So

Preliminary tax 2009 = €1800 (minimum)
Balance 2008 = €2000
Total payment = €3800 "


Hope that helps.

The above is open to correction but is my understanding of prelim tax.

Stoffa

thanks maddogcollins.

it helps, it is i guess what i feared as until today was only expecting the 2K bill. the extra 1800 is a very nasty surprise. does revenue accept installments? have i any other options?

stoffa.

maddogcollins

Unsure as to whether Revenue will accept installments or not.

Just so you know, interest can be charged on the difference between actual liability and prelim paid (if you only make a 90% prelim payment) of 9.96% p.a.

Give revenue a call prior to filing the return and see if an installment situation can be arranged. It could result in interest however. Just be aware that failure to return on time will lead to a 5% surcharge also (increasing to 10% if outside 2 months).

Revenue will give you acurate advice.

Sorry I cannot offer better advice.

Stoffa

thanks again for your advice.

dbran

maddogcollins wrote: »

To answer your question :

"preliminary tax is the taxpayer's estimate of their income tax payable for the year ended (in this case) 31st December 2009. It must be paid and filed by 31st October 2009 unless using ROS when it is the 16th November 2009. To avoid interest the prelim amount paid is the lower of:

• 90% of the final tax liability for the current year (2008) or
• 100% of the final tax liability of the immediately previous year (2007), or,
• 105% of the year preceding the immediately previous year (2006).

In terms of your own case as you had a rebate situation in the previous years you would be best advised paying a minimum of 90% of your 2k liability.

So

Preliminary tax 2009 = €1800 (minimum)
Balance 2008 = €2000
Total payment = €3800 "


Hope that helps.

The above is open to correction but is my understanding of prelim tax.

Maddingdogs you are almost right! Your years are out by 12 months.

So for current year it should be 2009, previous year should be 2008 and the third option is only if you wish to pay by installments which I dont think is relevant.

So in order to avoid any chance of interest and penalties your preliminary tax bill is €2000. If you pay less you may still avoid interest and penalties if the amount you paid is at least 90% of your final tax bill for 2009. You wont know if this is the case until sometime next year. That is why I would always advise to pay 100& of py liability to be safe. If you over pay you will always get a refund.

There is also the adjustment to make of 1.66% for the income levie in 2009 which will increase you preliminary tax bill further. You have to estimate the expected extra payment which would be due to the income levie and pay it over also.

Hope this helps

dbran

Mr. Incognito

I'm scratching my head reading this.

Firstly, only people that have a case 1 trade need pay preliminary tax so forget that right now.

Secondly only people that are self assessed need a form 11.

You my friend need a form 12 as a PAYE employee with earnings from a non PAYE source.

You can't really file these online only in paper form which means, you're late filing

SO.......

You can file the Form 11 online, bang in the rental income for the period Jan- Dec 2008 minus allowable expenses, forget about preliminary tax and pay whatever is owing and get yourself taken out of self assessment when the payment has processed.

I would suggest you hire a new tax consultant.

Stoffa

from the askaboutmoney forum:

A Form 11 is for people who a fully self-assessed, or who wish to move into that category. People who are currently PAYE, and whose net taxable additional income is more than €3,1xx (missed the fine detail, but the three thousand one hundred bit is right), must return a Form 11.

as my net taxable income is more than 3K then i figured i have to do the form 11. as for prelim tax, revenue are telling me i must submit.

still quite confused!

dbran

Mr. Incognito wrote: »

Firstly, only people that have a case 1 trade need pay preliminary tax so forget that right now.

I must humbly disagree.

If you have any income from a non paye source (unless it is trivial in nature ) then you are subject to self assessment. It is not just case 1 (trade) income, it is any income. You therefore need to file a form 11 (self assessment) and not a form 12 (not self assessment).

OP does have to pay preliminary tax if due.

Kind Regards

dbran

MartMax

Sorry lads, this is a bit out of topic.

Form 12 wrote:

This tax Return should be completed by an individual whose source of income is from a PAYE employment or pension or by a non-proprietary company director who pays all his/her Income Tax under the PAYE system

Proprietary director is who own 15% or more of the company or its controlling company.

Now further reading

Form 12 wrote:

Section 14 Finance Act 2005 amends the definition of a "chargeable person" for Self-Assessment purposes. An individual who is in receipt of income chargeable to tax under the PAYE system but who is also in receipt of gross non-PAYE income of €50,000 or more from other sources, such as trading, professional or rental income etc. but where this income has been reduced to nil or to a negligible amount because of deductions, losses, allowances and other reliefs, is regarded as a 'chargeable person'. An individual who is a 'chargeable person' for the purposes of Self-Assessment Income Tax should complete a Pay and File Income Tax Return Form 11 or Form 11E.

To sum up, if you are earning other income outside PAYE system of €50K or more, you are obliged to file a self-assessed tax return i.e. Form 11.

Disclaimer: I am not giving anyone professional opinion, the above is for general guidance on matters of interest only and should not be construed as professional advice or service. Please consult a professional!

Mr. Incognito

Self-Assessment

Self-Assessment is a system which gives you greater control and responsibility over your tax affairs. It applies to people chargeable to Income Tax who are in receipt of income from sources which are not chargeable to tax under the PAYE system or where some but not all of their tax on these sources of income is paid under PAYE.

Self-Assessment applies for Income Tax purposes to:

Self-employed persons (i.e. people carrying on their own business including farming, professions or vocations)
Persons receiving income from sources where some or all of the tax cannot be collected under the PAYE system, for example:
profits from rents,
investment income,
foreign income and foreign pensions,
maintenance payments to separated persons,
fees,
profit arising on exercising various Share Options/Share Incentives.
Under Self-Assessment there is a common date for the payment of tax and filing of Tax Returns, i.e. 31 October. This system, which is known as "Pay and File" allows you to file your return and pay the balance of tax outstanding for the previous year at the same time. Under this system you must:

pay Preliminary Tax for the current tax year on or before the 31 October each year,
make your Tax Return after the end of the tax year but not later than the following 31 October. This is known as the "specified return date",
pay any balance of tax due for the previous tax year on or before 31 October.

http://www.revenue.ie/en/tax/it/leaflets/it10.html#section2


Hmmm- You're right.

Bobby1984

dbran wrote: »

I must humbly disagree.

If you have any income from a non paye source (unless it is trivial in nature ) then you are subject to self assessment. It is not just case 1 (trade) income, it is any income. You therefore need to file a form 11 (self assessment) and not a form 12 (not self assessment).

OP does have to pay preliminary tax if due.

Kind Regards

dbran

+1 Info given by dbran is correct. Therefore you must pay 100% of 2008 or 90% of 2009 estimated liability. As a general rule i would always recommend paying 100% of current year liability as this rules out any uncertainty. However due to income levies you would need to pay more than €2,000 in preliminary tax in order to avoid interest being charged. Its hard to say an exact figure with out concrete figures in front of us.

PS get a better accountant/tax advisor :cool: